It was the first significant crypto-related shift in policy under Mark Uyeda, the acting chair. Donald Trump signed an executive order to prevent the creation of a US Central Bank Digital Currency (CBDC). He also established a group that would position the US in the forefront of cryptocurrency. Bitcoin supporters criticized this plan for not focusing on Bitcoin. Elon Musk (chair of Department of Government Efficiency, DOGE) and Senator Elizabeth Warren had a heated exchange over the government’s spending reforms.
SEC cancels controversial SAB 121
Securities and Exchange Commission (SEC), has canceled the controversial Staff Accounting Bulletin 121. This bulletin required that financial institutions holding cryptocurrency as assets for their customers record them on balance sheets. A new Staff Accounting Bulletin was issued on January 23, 2025, announcing the decision. The crypto industry has been fighting against this rule ever since its introduction in March 2022.
Hester Peirce is the SEC commissioner and the head of its crypto taskforce. She announced the decision in a post on social media, saying “Bye-bye SAB121!” This rule was criticized by both legislators and financial industry players for adding unnecessary administrative costs to firms. The critics argued that the requirement of reserves for crypto assets in custodial custody was not consistent with industry practices.
French Hill, Chair of the House Financial Services Committee called SAB 121 a “misguided rule” and praised it for being cancelled. Wiley Nickel, a Representative from the House Financial Services Committee, also raises concerns over how SAB 121 could have stopped US banks from storing crypto exchange traded products (ETPs), potentially increasing risk to non-banking entities. Senator Cynthia Lummis called the rule “disastrous” for the banking sector and an obstacle to American innovation with digital assets.
This is the first significant crypto-related regulation change made under Donald Trump. Former President Joe Biden vetoed a repeal of SAB 121 in 2024, despite bipartisan support for the effort to cancel SAB 121. A House of Representatives attempt to override Biden’s veto was also unsuccessful.
The new executive order sets the anti-CBDC stance in motion
US President Donald Trump signed also his first executive orders affecting cryptocurrency. David Sacks provided additional details in a Jan. 23 televised speech from the Oval Office. In the executive order, a working group is created whose primary goal is to have the United States become the world leader in crypto. Sacks has been appointed as the chair of this initiative.
This order prohibits also the establishment, issue, circulation and use of US central bank digital currencies (CBDC). It directs that the working group explores the creation of national cryptocurrency stocks and regulatory frameworks for stablecoins. This group will include a few key individuals, such as the US treasury secretaries, the attorney generals, the chairs of SEC, Commodity Futures Trading Commissions (CFTC) and SEC, and others.
This directive also cancels an executive order issued by former president Joe Biden in March 2022, calling on federal agencies and other government entities to create a framework of regulation for cryptocurrency. Trump pardoned Silk Road’s founder Ross Ulbricht as well, another promise he made when he ran for president.
The executive order may signal a significant change in US policy towards cryptocurrency. However, many questions remain about its authority. Trump signed an executive order recently to try and revoke the birthright citizenship as per 14th Amendment. This was quickly overturned by a judge for being unconstitutional. The new initiatives focusing on cryptography are also yet to see their impact and feasibility.
Trump’s Digital Asset Stockpile Plan is Criticized
Bitcoin supporters are disappointed by the wording of US President Donald Trump’s executive order, which does not specifically mention Bitcoin. The critics raised concern that other cryptos could be included in the stockpile, rather than focusing only on Bitcoin. This is despite Trump’s promise during his campaign to create a “strategic National Bitcoin Stockpile” and the fact that he made this promise at a Nashville Bitcoin Conference last July, when he proposed using over $20 billion of Bitcoin seized by Justice Department.
Peter McCormack, podcaster, pointed out that the Executive Order does not mention Bitcoin. Travis Kling of Ikigai Asset Management revealed people were quite upset about using the term “digital assets”. Dennis Porter of Satoshi Action Fund defended this language, calling it pragmatic and tech neutral to avoid any political friction. The CEO of the Bitcoin-focused Satoshi Action Fund defended the language by calling it “pragmatic” and “tech neutral” to avoid political friction.
Currently, industry leaders seem to be very divided over the issue. Pierre Rochard (Vice President, Research, Riot Platforms) accused Ripple of lobbying for a Bitcoin only reserve in order to promote CBDCs that are built on the platform. Brad Garlinghouse, Ripple Labs CEO, dismissed the claims by stating Ripple is increasing the chances of creating a crypto-strategic reserve that could include Bitcoin.
The US government currently holds an extensive portfolio of cryptocurrencies. This includes $20.4 billion in Bitcoin (which accounts for nearly 98% of the total holdings), $182 millions worth of Ethereum, and other altcoins.
US Government crypto holdings ( Arkham Intelligence)
A digital assets stockpile is a type of reserve, which can be used in emergencies or for future purposes. It is not the same as a strategic asset reserve, which is meant to increase a country’s financial stability.
Elon Musk and Senator Warren Clash
US Senator Elizabeth Warren, the head of the Department of Government Efficiency, wrote an open message to Elon Musk and suggested measures to cut wasteful spending by the government. Warren suggests fully funding Internal Revenue Service, closing carried interest loopholes and introducing capital gains taxes on estates.
Warren’s measures are aimed at wealthy people, but she believes reforms of estate tax exemptions can boost revenue for the federal government. Her estimates show that eliminating the step-up basis of assets transferred upon death would save more than $60 billion per year.
Warren also has concerns about DOGE leadership, including potential conflicts of interests. She accused the committee for its lack of ethical standards of encouraging corruption. Warren and Musk, despite being unlikely friends, share some common goals in improving the efficiency of government, even though they have very different approaches.
Warren claims that full funding of the IRS would generate huge returns through cracking down tax evasion, and improving taxpayer services. Musk and Trump, however, showed resistance towards expanding the IRS. Musk was initially ambitious in cutting government spending by $2 trillion, but he has now changed his expectations to $1 trillion, due to challenges presented by programs such as Medicare and Social Security that account for most federal spending.
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